SEBI said all 40 self certified syndicate banks should provide ASBA facility at their branches by December-end

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has asked banks, authorised to accept application supported by blocked amount (ASBA) forms wherein bid amount for public offer shares remain in investors' accounts till allotment, at all their branches by the end of 2012, reports PTI.

SEBI introduced ASBA facility in 2008, under which an application for subscribing to an issue involves blocking of application money in the bank account.

The facility is provided through self certified syndicate banks (SCSBs) and any bank desirous of offering ASBA facility need to register with SEBI. However, the facility is not available at all the branches of such banks.

In a circular issued, SEBI said that it has been felt that ASBA facility should be provided at all branches of self certified syndicate banks (SCSBs).

To achieve this goal, SEBI said that in the first phase each SCSB should designate 50% its total branches as 'Designated Branches' for ASBA by 31 October 2012.

In the second phase, each SCSB should designate all of its branches as 'Designated Branches' for ASBA by 31 December 2012.

SEBI also asked all the SCSBs to submit a status report for each of the two phases within 15 days from the due date of the respective phases.

As per the latest data available with SEBI, there are a total of 40 banks registered as SCSBs.

Out of these, the ASBA facility is available at just one branch in cases of at least nine banks, including HSBC, Citibank, Deutsche Bank and BNP Paribas. Besides, the facility is available at less than 20 branches for most of the banks, including giants like ICICI Bank, SBI and HDFC Bank.

The regulator said that it was announced in this year's union budget there was a need to simplify the process of initial public offers (IPOs), lower the capital raising cost and help companies reach more retail investors in small towns.

"Based on the analysis of the current presence of ASBA facility, it is felt that there is substantial scope for increasing the reach of ASBA facility to make the application process more convenient for investors," SEBI said.

"Towards this end, consultations were held with Reserve Bank of India, Indian Banks' Association and other market participants, to explore the possibility of providing ASBA facility at all branches of Self Certified Syndicate Banks (SCSBs)," it added.

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Subbarao said he hopes to evoke a positive response from banks and the lending rates will go down since there is credit flow for productive sector

Chhaproh (Himachal Pradesh): Reserve Bank of India (RBI) Governor D Subbarao expressed hope that banks would lower their lending rate in response to the recent cut in the cash reserve ratio (CRR)-- the percentage of deposits banks have to keep with the central bank, reports PTI.

"We hope that there will be response from banks and the new rates will go down so that there is credit flow for productive sector," Subbarao, who was in north India in connection with an outreach programme, said.

Following the CRR cut by the Reserve Bank, the country's largest bank State Bank of India (SBI) reduced the minimum lending rate by 0.25% last week.

With the reduction, the base rate of the bank came down to 9.75%, the lowest in the banking sector.

It is a challenge for banks to keep the lending rates low, Subbarao said.

Last week, Reserve Bank reduced CRR by 0.25% but refrained from reducing lending rates in view of high inflation.

The central bank's decision released Rs17,000 crore of primary liquidity into the system.

The liquidity infusion, RBI had said, would ensure adequate flow of credit to productive sectors of the economy.

Following the cut, CRR will come down to 4.5% while the repo rate, at which the central bank lends to the banks, would remain unchanged at 8%.